The moment you begin thinking about placing your home on the market for sale, is the moment you most need the assistance and advice of an experienced real estate attorney. Clear, competent, and timely legal advice will set you on the correct path, and avoid, or at least anticipate, the many problems and pitfalls you may encounter in the marketing and sale of your home.
You need to know what to expect in the process, and also need to prepare yourself for the inevitable issues which arise in most, if not all, residential real estate transactions. For example, do you know what a “dual agent” is? Well, that’s the legal fiction that most realtors utilize to describe what occurs when they seek to represent, not only you and your interests, but at the same time, the interests of the buyer. When you first sign your listing agreement with the realtor you intend to retain to sell your home, they will ask for your “informed consent” to them acting as the dual agent for you AND the buyer – an obvious conflict of interest, but something most realtors do every day. So, in entering into a realtor’s listing and commission agreement, you must keep in mind that your realtor is not going to be looking out for solely your interests, but those of the buyer too (and, parenthetically, the realtor’s interests, also).
Realtors require you to supply them with a “disclosure statement”, setting forth a long recitation of the condition of your home, and whether it may be subject to any adverse conditions or defects. If you submit such a statement, you must be certain to provide clear, unequivocal, and accurate answers to the disclosure questions – or else, you may be liable to your buyer for failing to disclose “known, hidden defects” in your home, or conditions which you are aware of in the area surrounding your home, such as nuisances, troubling neighbors, prior criminal activity in your area, prior damage to your home by flood, fire, or other casualty – even where the damage has been completely corrected, past or potential flooding conditions, future development in the area, or environmental hazards – or, believe it or not, even the possible presence of ghosts in your home!
The Listing Agreement
The listing agreement is among the most important and impactful documents you may sign during the home sale process, and all of its terms are negotiable! The commission need not be 6% – the “standard” commission rate, but may be lower, depending upon the circumstances surrounding your sale. If you are in a “hot” market, or your home is highly desirable in the market, or if you have already seen interest from potential buyers, you may be able to require a commission of 5% or even 4%. Also, the length of the listing is variable, and you can negotiate for a longer or shorter listing period, to suit your needs, and to motivate your realtor to sell the home on YOUR timetable and upon YOUR terms. You may also want to specify the amount and type of marketing the realtor proposes to employ to sell your home – such as advertising, open houses, multiple listing, etc. The listing price you set, should not be based solely upon what the realtor wants, but should also be based upon other, more-personal or subjective factors, such as the general condition of the home, the prices of comparable homes in your neighborhood, the desirability of your home or neighborhood, the number of comparable homes presently on the market – essentially, your competition, or other issues which may be pressing you to sell.
Did you know that most towns, as a condition of sale of your home, require the issuance of a “Certificate of Occupancy”, or “Certificate of Compliance”? – which includes, in addition to required inspection confirming the presence of required smoke & carbon monoxide detectors, may also require that your home meet current construction code requirements, or have no open or outstanding construction code permits. So, for example, if you built an addition to your home 20 years ago, and the town has no record of having conducted their final inspections, or of issuance of a final certificate of occupancy, you may need to have the addition inspected now – subject to current construction code standards – before the town will clear your home for sale! Also, in the “standard” realtor’s contract of sale, you will be required to represent that all prior work on the home was in accordance with the law, and all required permits were obtained therefore – and if it turns out that this representation is incorrect, you may be liable to your buyer to completely rebuild the “illegal” improvements and/or obtain the requisite permits therefore, before you may sell.
Please reach out to your attorney the moment you begin thinking about selling your home – being forewarned is being forearmed.
David C. Dixon, Esq.
Feeney & Dixon, LLC